When was the last time you read the fine print?
Not just in business, but in your everyday life? Like the time you purchased a phone, bought a car, rented or purchased a home?
Whether you’re a business owner, service provider or employee, just about everything we do in life is built on contracts.
Knowing what’s in that contract is incredibly important so that you can limit your liability.
How? Know and understand the following: liability, indemnification and hold harmless:
- Liability: The responsibility or obligation of repaying, fixing, doing something that you agreed to do. Legal liability means it’s enforceable in a court of law or through some kind of tribunal, like in mediation or arbitration. (Check out Episode 18 for more on that.)
- Indemnification: You agree to protect someone else – to protect them against hurt, loss, damage or injury that might occur, including as the result of that actual work together.
- Hold Harmless: An agreement upfront where one of the parties assumes potential liability.
Relationships are a natural part of life, especially if you’re a business owner, service provider or employee. But when you create relationships, you’re creating expectations.
But it’s important to make sure there is as much equity as possible in clear expectations that create reciprocity. For me, that means I treat others as I want to be treated.
In other words, if something were to happen, I want to be treated with respect and I’m going to make sure that respect is mutual.
The best way to avoid getting burned by clients is to have clear expectations, communication & contracts.
Because if something goes wrong and you don’t have something that specifically says there’s a limitation of liability, you’re not protected.
But when you have a strong contract with clear expectations and consequences, you can comfortably sleep at night knowing that you’re protected. I love drafting contracts – they’re my favorite. For exactly these reasons!
As you go about your day, think about this:
- You’re not expected to understand or know the law inside and out when it comes to your business or career. The goal is to understand the basics or concepts. In law, we call this “spotting the issue,” saying, “I think this is going to be an issue. Let me go ahead and address it now.
- Take a moment to look through your contract, handbook or any other agreement and try “Spotting the issue.”
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